RBI Slaps Rs1.25 lakh Penalty on Valsad Mahila Nagarik Sahakari Bank

Moneylife Digital Team 27 August 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs1.25 lakh on Gujarat-based Valsad Mahila Nagarik Sahakari Bank Ltd for non-compliance with the directions issued by the banking regulator.

These directions relate to income recognition, asset classification, provisioning and other important areas, including urban co-operative banks (UCBs), membership with credit information companies (CICs), know-your-customer (KYC) norms and the maintenance of deposit accounts for primary UCBs.

A statutory inspection of Valsad Mahila Nagarik Sahakari Bank conducted by the RBI revealed several issues. The Bank failed to classify some loan accounts as non-performing assets (NPAs) according to income recognition, asset classification and provisioning norms.

Additionally, it did not submit data, including historical data, to three CICs as of 31 March 2023. The Bank also neglected to periodically update KYC information of its customers as required. Furthermore, it did not classify accounts as inoperative or dormant if no customer-initiated transactions occurred for over two years.

"After considering the reply and oral submissions of the Bank during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," the central bank says.

RBI said the penalty is based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.

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